Articles

Who Determines Customer Property

Mok, Mariel

Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act gives the government the Orderly Liquidation Authority (“OLA”) to seek the liquidation of failing financial companies with the appointment of the Federal Deposit Insurance Corporation (“the FDIC”) as receiver. When applied to securities broker-dealers, the OLA calls into question the incorporation of the Securities Investor Protection Act of 1970 (“SIPA”) that provides for the orderly liquidation of an insolvent broker-dealer under the oversight of the Securities Investor Protection Corporation (“the SIPC”). The result is a conflict of control between the FDIC and the SIPC in the event of an OLA broker-dealer liquidation and investor uncertainty regarding the incorporation of SIPA protections for customer property. Problematically, the OLA and its implementing rules leave the FDIC with discretion to modify SIPA protections for customer property.

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Also Published In

Title
Columbia Business Law Review
DOI
https://doi.org/10.52214/cblr.v2020i2.7218

More About This Work

Published Here
August 29, 2022